(Readers: The assumed chronological date for most of the entries in this blog is after the expected 5^th revolution in the US.  For more background about  the expected revolution – labeled the Revenge Revolution – and the author, please view entry #01.)

Scene: Jordan and Helicopter Man (H-Man) continuing a conversation about economics, with special emphasis about the role of government.

H-Man:  “We’ve got our coffee refill.  Now, back to my question.  ‘Why shouldn’t the government take the same approach to economic policy as we do in our household?’  The approach makes perfect sense to me…and a lot of other people.”

Jordan:  “In certain economic situations, the behavior of households should be exactly the opposite.  Ironically, what seems right intuitively is actually wrong.”

H-Man:  “I am confused.  When should governments and households behave in opposite ways?  Give me a specific example.”

Jordan:  “Let’s say economic times are bad.  Think back to 2008-2009.”

H-Man:  “Lots of unemployment and concerns about more layoffs.  Seems to me very logical for people to tighten their belts and reduce spending.”

Jordan:  “I agree.  Very rational behavior for an individual or family.”

H-Man:  “At least we agree on something.”

Jordan:  “Now, here’s a basic question.  ‘Where does your income come from?’”

Greenie:  “Since I’m not independently wealthy, my employer.”

Jordan:  “And where does your employer’s income come from?”

H-Man:  “Selling stuff.”

Jordan:  “So what if a lot of people quit buying stuff from your employer…and quit buying stuff from many other companies?”

H-Man:  “The companies make less money.  Then there’s probably not enough money to pay the employees…and then more layoffs”

Jordan:  “So what happens if the government cuts back on spending money also?”

H-Man:  “Even fewer purchases, less income for companies…and even more layoffs.  So if the government tightens its belt along with everyone else, the economy gets worse…not better.”

Jordan:  “Remember, what you spend is my source of income.  You cut back on spending and I have less income and then I have to cut back.”

H-Man:  “So the only way to get the economy going again is for someone to start spending money.”

Jordan:  “You are beginning to understand why government needs to increase spending in economic slowdowns and not decrease spending.  The claim that the government should behave as a household actually makes the situation worse, not better.”

H-Man:  “Why not give tax cuts to the people making money instead of having the government spend money.  I just don’t like the idea of government spending money that’s not theirs.”

Jordan:  “Tax cuts might help some but not much.  Here’s why.  If you are out of a job, how much income tax will you be paying?”

H-Man:  “Probably little or none.  So, I see what you’re saying, a tax cut doesn’t really help.”

Jordan:  “What if you are relatively wealthy and get a tax cut.  What will you do with the extra money?”

H-Man:  “Maybe spend a little.  But won’t the wealthy invest it and create more jobs?”

Jordan:  “Invest the money in what?  Additional plant capacity?”

H-Man:  “I guess not.  If people aren’t buying products now, why would someone invest in additional plant capacity?  The idea of build it and they will come might work for a movie but not in real life.  Adding capacity without demand makes no sense.”

Jordan:  “H-Man, I’m proud of you.  We are starting to make real progress.”

H-Man:  “But what about the government deficit?  All that spending with no new tax revenue scares me.”

Jordan:  “What’s the alternative?  Someone needs to spend the money.”

H-Man:  “I know but the country should not have a deficit.”

Jordan:  “Oh really, H-Man.  Just a bit of trivia.  When was the last time the federal government did not owe money?”

H-Man:  “I have no idea.  OK, under Herbert Hoover?  No, under Teddy Roosevelt.”

Jordan:  “Your second guess is closer but still way off.  Try Andrew Jackson.”

H-Man:  “Really?  That must have been about 1840?”

Jordan:  “Very good.  1835. But remember what you said was the role of government – protecting citizens, creating infrastructure, supporting commerce, helping manage the economy so citizens do not lose all assets.”

H-Man:  “What you trying to pound into my head is the method to execute those roles, especially managing the economy, is exactly the opposite of that of a household and business.  When it makes sense for people and businesses to cut back in harder economic times the government needs to take the opposite approach and spend money.  Otherwise the economy gets worse.”

Jordan:  “Besides the government can pay down the deficit when times are good and tax revenues higher.  You know, like the budget surplus under Bill Clinton.”

H-Man:  “I know.  I know.  And the Republicans under George Bush implemented a bunch of tax cuts and gave away the surplus.  Why did Republicans do that?  Seems like a back-asswards strategy.”

Jordan:  “You mean the people who harped about government deficits, Republicans, turning around and creating a deficit when there was an opportunity to pay down debt?  Makes you wonder if they don’t understand economics, they’re cynical or have yet a different motive.”

H-Man:  “But I still don’t like the idea of government having so much debt.  That’s not right…or fair.”

Jordan:  “OK.  Let me ask you, if the government should not have debt, then what about companies?  Should they have debt?”  And what people?  Should people or households have debt?”

H-Man:  “I suppose some debt is OK.  But not sure how much.”

Jordan:  “You own a house?”

H-Man:  “Yes.  Have for many years.”

Jordan:  “When you bought your first house was the mortgage larger than your annual income?”

H-Man:  “By a long shot.  I guess 2-3 times my annual income.”

Jordan:  “Did anyone think that was a bad idea to take on that much debt?”

H-Man:  “No, everyone thought it was a smart idea.”

Jordan:  “So the same people who think the government should operate like a household told you it was a smart idea to take on all that debt.”

H-Man:  “Yes.”

Jordan:  “But the same people who wanted you to take on debt don’t want government to take on debt?  Is that right?”

H-Man:  “Jordan, I’m having another one of those ‘never-thought-about-it-that-way moments’.  I see what you mean.  Their argument really makes no sense.”

Jordan:  “A lot of their economic arguments make no economic sense.”

H-Man:  “And voters finally woke up and realized that Republicans were selling them phony economic arguments.”

Jordan:  “I call it Republican economic BS.”

H-Man:  “Your economic ideas don’t seem so progressive.  In fact, they seem very rational now that I think about it.”

Jordan:  “Good.  H-Man, no economic rehab for you.”

H-Man:  “I’m sorry this country had all the disruption…but I’m glad there was a Revenge Revolution and we got this country back on track.  We are much better off now and will be for many generations.”

(Readers: The entries in the blog center around the author’s prediction that the US will experience a 5^th revolution by 2020-2025.  Some early vignettes precede the revolution; later vignettes follow the revolution.  Many characters appear regularly.  More about the blog and the author.)

(Scene: Jordan and Ms. having dinner. Conversation continues.)

Ms.: “Alright, now that we’ve elected Rocky as president and Bullwinkle as vice-president, it’s time to get serious.”

Jordan: “Serious about what?  I’m afraid to ask.”

Ms.: “You don’t need to be afraid of me Jordan.  Serious about human behavior.  Here’s what I would like to know.”

Jordan: “And that is…”

Ms.: “Why are Republicans not grateful?”

Jordan: “Exactly what do you mean?”

Ms.: “Exactly what I mean is most Republicans should be called Republicants.”

Jordan: “Are you implying that because Republicans answer to almost every proposal to help the common good is ‘no’ and often ‘hell, no’!  Is that what you’re implying?”

Ms.: “Jordan, sometimes you are smarter than you act.”

Jordan: “Thanks…for what I’m not sure.”

Ms.: “Take health care.  Rather than supporting a Republican-created proposal for broader health care…not even a national health care system but one that would result in increased economic growth…the answer was ‘you people’ – ‘you people’ meaning those of lessor means…cannot have affordable health care.”

Jordan: “What else?”

Ms.: “Voting rights.  For those of you people who have limited means and might for a Democrat, we Republicants are not going to let you vote unless…unless you people have a certain type of ID.”

Jordan: “Republicans are trying to prevent voter fraud.”

Ms.: “Jordan, study after study after study has indicated voter fraud does not exist in this country.  Over the last 50 years there were more people charged with violating bird migratory laws than charged with voter fraud.”

Jordan: “The voter ID laws are designed to be preemptive and avoid future fraud.”

Ms.: “Right.  Maybe Republicants should pass a law preventing dogs from driving cars.  The new driverless car technology will allow people to send their dog to the store and fetch food.  Let’s stop that idea now before those people send their dogs to Starbucks.”

Jordan: “You know what I mean.”

Ms.: “To show you how far Republicants have gone preventing ‘those people’ from voting, in Texas, the approved ID’s include a gun permit but not an ID from an academic institution.  So some wacko with a gun permit gets to vote and a straight-A student at Texas A&M, a state university, who doesn’t have a driver’s license cannot vote.  Makes sense to me.  C’mon, what are Republicants afraid of?

Jordan: “Ok, so Republicans….”

Ms.: “Please use the proper term, Republicants.”

Jordan: “Voting rights aside, for many programs Republicans do seem to want to tie eligibility to payment of income tax.  If you pay tax, then there is a tax credit available.  If not, there might be some subsidy but with some strings attached.”

Ms.: “What if you do not or cannot earn enough to earn a tax credit, let alone use a tax credit?  For those people…those slouchers and takers, the tax credit is of no value.”

Jordan: “Then those people should get another job and earn more money.”

Ms.:  “Quit being a smartass.  You sound like a Republicant.  Income taxes are not the only taxes people pay.  And where would these people find another job since the CEO’s shipped many of the jobs off shore?”

Jordan: “A few minutes ago you asked why Republicans weren’t more grateful.  More grateful for what?”

Ms.: “I asked because Republicants don’t even sound grateful for what they have.  Repubicants sound more  hateful than grateful.  Republicants will think I’m crazy but I’m grateful to pay income taxes.”

Jordan: “Why are you happy to pay taxes?”

Ms.: “I said grateful to pay income taxes, not happy.”

Jordan: “OK, grateful.  Why?”

Ms.: “Because paying income taxes means I have enough income for more than my basic needs.”

Jordan: “You sound like a socialist.”

Ms.: “Wakeup, Jordan.  Aren’t you grateful for all you have?”

Jordan: “Yes, I am.”

Ms.: “Then you should be grateful to be able to share.  And that’s what most taxes do – help spread the wealth.”

Jordan: “You said most taxes.  What about the inefficiencies of government?  The private sector is much more efficient.”

Ms.: “Fox News have you brainwashed?  Actually for some projects I agree.  But the idea that the private sector is more efficient for big innovative, high-risk projects, is just BS.”

Jordan: “Agreed.  The private sector doesn’t fund public works projects and very little pure R&D.”

Ms.: “Are Republicants supporting programs like – man-to-the-moon, interstate highways, railroads, satellite communication, internet, major medical research?  No.  Why?  Because no clear ROI initially and we want our little company CEO’s to get their bonus.”

Jordan: “Feel better now?”

Ms.: “Not really.  I’m very angry and frustrated that the segment of society with the most education and the most wealth seems to be the least grateful.  And with that kind of attitude the Republicants wonder why there was a revenge revolution.”

(Readers: Please note the blog is constructed as a story. While not all chapters are linked, after reading a few recent entries, you might want to start at the beginning. More about the blog and about the author. )

Scene: Jordan having coffee with JC at usual spot near office in Washington, DC.  Jordan holds up newspaper article.

Jordan: “You know, this article really bothers me.”

JC: “What’s the issue?  Headline says North Carolina wants to attract jobs.  What’s wrong with jobs?”

Jordan: “Jobs are not the issue.  The issue is how jobs are created…emphasis on ‘created.’”

JC: “I’m not following your logic.  The state of NC wants more jobs, so…”

Jordan: “…excuse me but North Carolina’s idea of job creation is stealing jobs from other areas.”

JC: “Whoa, big boy, slow down.  Stealing?  Did you say stealing?”

Jordan: “Yes, I said stealing.  And I mean stealing.”

JC: “Why is attracting jobs from another location stealing?”

Jordan: “Look at it from the perspective of the other location.  What gives NC the right to take jobs?”

JC: “I’ll be honest.  I never thought about job relocation as stealing.”

Jordan: “Let’s say you have a factory in town.  And say the factory has been there a while.”

JC: “Ok.  What about it?”

Jordan: “And let’s say your father worked there.  And maybe your grandfather.  That’s not uncommon.”

JC: “I’ve read stories about families like that.”

Jordan: “When I was at Buick it was not unusual to find people who were 3^rd generation.  Same town, same factory.”

JC: “If you take the three generations, there’s what 100 years…or more seniority in one family.  That’s a lot of time devoted to one company.”

Jordan: “Right.  Seems like a major commitment to me.”

JC: “A major commitment but the people also got paid along the way.  So what’s the big deal?”

Jordan: “You don’t get it, do you, which is really surprising coming from you.  The big deal is people.  People make up organizations.  Paychecks don’t make organizations.”

JC: “I agree that families, companies, even cities are built around people.”

Jordan: “And people create and build an emotional bond with the organization.”

JC: “OK but I’m still not following why recruiting jobs from another state should be labeled as stealing.  What am I missing?”

Jordan: “What has the recruiter done to help build the organization and the emotional bond?”

JC: “Nothing really.  But the recruiter does offer incentives.  Now that I said that, the incentives are really for senior executives…and not the worker bees.”

Jordan: “To me allowing one state to recruit companies…really jobs…from another state, perverts the incentive to create jobs.  Allowing recruiting destroys loyalty and prevents workers from building a strong emotional bond with the company.”

JC: “So my cynical self says, so what?  Who really cares about the workers?  Why shouldn’t management take a few bucks?”

Jordan: “Yes, your cynical self has taken over.  But now I know you understand why I am frustrated with the program.  Money talks…but only for a very few.  A lot of other people get the finger.”

JC: “I see what you mean by calling it stealing.  People put a lot of time and effort into building an organization…and then wham, management packs up and leaves.”

Jordan: “Most people think about stealing in terms of not paying for goods or services.  You know, like walking out of Best Buy with a computer or skipping out of a restaurant and not paying for dinner.”

JC: “But you want to expand the definition.”

Jordan: “I’m not expanding the definition.  Just making sure people include one thing that cannot be purchased and cannot be replaced.”

JC: “Is that one thing…time?”

Jordan: “Yes, time. What many executives and especially investors seem to forget is the value of time.”

JC: “Give me an example.”

Jordan: “I can’t tell you how many times I’ve heard prospective investors ask, ‘How much skin…meaning how much money… you have in this project?”

JC: “Seems like a fair question.  How do you answer them?”

Jordan: “With another question.”

JC: “What else coming from you.  What’s the question?”

Jordan: “Simple.  ‘Can you buy yesterday?’”

JC: “Can you buy yesterday?”

Jordan: “Yes.  Simple question with a simple answer.”

JC: “The answer is always ‘no’.”

Jordan: “Think about it, regardless of how much money one has, yesterday is not for sale.”

JC: “So how do the investors respond?”

Jordan: “Surprisingly, most have never been asked the question…or even thought about it.”

JC: “Does the question change the tone of the conversation?”

Jordan: “Sometimes.  But my experience has been most investors, especially private equity firms and investment banks are so focused on one thing – how much money can they make – that they do not care about your time and commitment.  To them one’s time is of no value.”

JC: “Without sounding too much like a Republican, isn’t that why they’re in business – to maximize profits?”

Jordan: “Partially.  But not the entire reason for being.  The companies do have an obligation to society.”

JC: “Surely you are not opposed to letting investors make money?”

Jordan: “I’m all for making money, but not at the expense of destroying families, institutions and cities.”

JC: “You’re sounding like a populist.”

Jordan: “Maybe so but this is a conversation that society needs to have.”

JC: “Anyway, we started this conversation by you stating the state of North Carolina was stealing.  If I understand your logic, recruiting companies to relocate in North Carolina, or any state for that matter, is stealing from families and cities where the organization is located currently.  Right?”

Jordan: “You got it right.”

JC: “I need some more of your thinking but I also need a refill.”

(To be continued)